Normative Economics…

Economics is usually presented as a positive science. It describes what is and not what ought to be; and while economics research certainly draws welfare inferences and makes policy implications, the analysis itself is typically understood to be impartial. In fact, with its axiomatic and mathematically rigorous character, economics tends to aspire to the pure scientific method and seek a similarly removed status as disciplines like physics or chemistry. Yet, there is something about economics that makes this impossible: as a social science, its findings can alter the very subject of its inquiry, and thereby even what is not can become the way economics describes it. We learn through economics and therefore behave differently in the marketplace.

Normative-Economics.com is intended as a forum for students and professors to explore this idea through shared observations of how we all and the people around us behave in response to economic findings. Do nations devalue their currency to boost exports because of their increased understanding of foreign exchange mechanisms? Do we estimate our earnings prospects and adjust savings and borrowing in an effort to smooth consumption because we understand this to be optimal behavior? And have airline companies become more effective in price discrimination and strategic behavior due to their increased understanding of industrial organization?

Arguments and anecdotes related to these and other questions will hopefully shed a light on how positive our economic findings change our normative view of the world.